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AT&T Eyes Expanding U-verse

Craig Matsumoto
News Analysis
Craig Matsumoto
10/18/2012
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AT&T Inc. (NYSE: T) is considering expanding its U-verse buildout, offering high-speed broadband to some -- probably not all -- of the 18 million access lines that don't yet have it, according to one analyst's report Thursday morning.

AT&T is discussing this internally and should make a decision within weeks, writes George Notter of Jefferies & Company Inc. The carrier has an analyst day planned for Nov. 7, so it's possible any big news could come out then.

The U-verse expansion would probably take 12 to 18 months, equipment-vendor sources told Notter.

Why this matters
Obviously, the first 30 million-line deployment concentrated on areas easy to wire up and/or filled with likely customers, so any expansion would start bringing broadband to more remote areas. Notter points out that the remaining 18 million access lines are "scattered over 80 percent of AT&T's geographic footprint."

Alcatel-Lucent (NYSE: ALU) provided the fiber-to-the-node gear for the original U-verse deployment and would be the likely choice for the expansion, Notter writes. Part of the reason is because the expansion isn't big enough to justify the OSS/BSS work required to bring in companies such as Adtran Inc. (Nasdaq: ADTN) or Calix Networks Inc. (NYSE: CALX)

About 3 million to 5 million households would get FTTN in a U-verse expansion, Notter estimates. Most of the rest would get access via LTE, and that part of the deal could be split between AlcaLu and Ericsson AB (Nasdaq: ERIC), he writes.

The FTTN business wouldn't be huge for AlcaLu -- about $110 million to $190 million in DSLAM equipment, Notter writes.

For more



— Craig Matsumoto, Managing Editor, Light Reading

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joanengebretson
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joanengebretson,
User Rank: Light Beer
12/5/2012 | 5:18:56 PM
re: AT&T Eyes Expanding U-verse


Any AT&T lines without broadband or with low-speed broadband are in danger of becoming worthless as more & more people cancel landline voice. So it doesn't seem like AT&T has many options other than to deploy some sort of LTE-based fixed offering like Verizon's HomeFusion or expand the availability DSL -- although whether it's full blown high-speed DSL in the form of U-verse or something slower remains to be seen.


Any areas that don't have broadband of at least 4 Mbps available are targeted as part of the Connect America Fund, so AT&T might be able to pick up some money to help fund the buildout. But if the company doesn't build out broadband to those people, a competitor could bid to take a CAF subsidy & do the broadband build-out instead.That won't happen right away, but it's something AT&T has to be thinking about.

cnwedit
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cnwedit,
User Rank: Light Beer
12/5/2012 | 5:18:56 PM
re: AT&T Eyes Expanding U-verse


A new Fitch report is claiming AT&T is getting ready to invest in its rural business, instead of walking away from it or trying to sell its rural territories, as Verizon did, and I wonder if this is part of that trend.  Apparently Randall Stephenson told analysts AT&T was considering rural investments at a recent analyst meeting.


 I don't know how well U-verse would work in very rural areas, but given the progress made with vectoring and more, it's conceivable AT&T could deliver more bandwidth over the copper lines to at least bring high-speed Internet to rural areas that don't have it now, and potentially its video product.


The Fitch report press release is here: http://www.businesswire.com/news/home/20121015006592/en/Fitch-Publishes-Report-ATT-Rural-Access-Line


It will be interesting to see how this plays out and whether AT&T might even accept Connect America funds in the second round - they turned them down initially -- to help pay for the buildout.

paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:18:55 PM
re: AT&T Eyes Expanding U-verse


Here is an example of one of these rural AT&T properties....


 


http://en.wikipedia.org/wiki/Laytonville,_California


 


Nobody is building there.  People seem to not get how rural this real rural stuff is.  I use a bit of a story to give people an idea.  Folks here know I have worked at AFC.  Which means I worked in Petaluma, but in fact I live in Santa Rosa or as I call it the end of civilization in Northern California.


- Northern California is funny because if you look at a map, San Francisco is actually Central California.


- Santa Rosa has about 150,000 people


- There are about the same number of people between Santa Rosa and Oregon along the 101 corridor. 


- This is an 8 hour drive and you pass through a town of about 40,000 on the way.


 


The ONLY way that people are overbuilding or doing major work in these kinds of areas is the mandatory imposition of a universal service obligation.


seven


 


 

cnwedit
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cnwedit,
User Rank: Light Beer
12/5/2012 | 5:18:54 PM
re: AT&T Eyes Expanding U-verse


So  what could AT&T do in an area like Laytonville? Copper or LTE?

paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:18:53 PM
re: AT&T Eyes Expanding U-verse


 


Could, Would or Should?


What they could do is anything.


What they should do is nothing. 


What they would (will) do is potentially expand on their DSL.  


Biggest issue in the smaller COs has been the need (believe it or not) to meet Pronto requirements.  If that can be eliminated, they could backhaul the dsl in these smallish areas.


Sattelite is a much better option for these folks most of the time and already exists.  So, there is not a big need for video that drives much of the U-verse bandwidth.  Just more and better DSL is probably the correct middle of the road.


What you might see in conjunction with that is an expansion of the u-verse footprint beyond where it is today into adjacent small COs.  To go 150 miles to the nearest u-verse territory seems unlikely.


seven


 

paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:18:52 PM
re: AT&T Eyes Expanding U-verse


Laytonville does not have u-verse and LTE is NOT the same as u-verse which is a voice video and data offering.  And we will see if and when 4G comes there.  And by the way, 3G only exists in the little hamlet not in the outlying parts of the town.  You can see that on the coverage maps.


seven


 

opticalwatcher
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opticalwatcher,
User Rank: Light Beer
12/5/2012 | 5:18:52 PM
re: AT&T Eyes Expanding U-verse


Laytonville, California is on US101, which is pretty much covered by ATT, both voice and data (and, I am sure, by Verizon and Sprint).


So Laytonville is already covered. When the upgrade to LTE is complete, then even fast data plans will be available, at no extra cost to any of the ISPs (though probably at extra cost to these customers).


Now pick a town more off the beaten path and I don't know what the solution is. When WiMax first came out they talked about using it it rural areas. Have few cell stations and broadcast with a stronger signal. Fewer cells are needed in low-populated areas. I don't know how realistic this is, though I've heard of low-population communities is Oregon where they did something like this using a WiFi mesh.


In any case, wireless is a heck of a lot less expensive way to reach out-of-the-way houses in rural areas.

fgoldstein
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fgoldstein,
User Rank: Light Sabre
12/5/2012 | 5:18:51 PM
re: AT&T Eyes Expanding U-verse


Tera, mobile coverage is no substitute for wireline.


Mobile, even 4G, provides fast burst speeds, but the cost/bit is very high, so data caps or costly measured service are the rule.  Your typical home broadband subscriber runs 30-60 GB/month.  Try that on mobile!  Even one good-sized Microsoft Update (the second Tuesday specials) can eat up a large share of a mobile data plan -- of course mobile devices don't run XP or Win7.


Verizon's Cantenna plan does provide relatively cheaper bits than its mobile plans, but they're still costlier than wired bits.  So they're sutiable for home broadband IFF you don't use it to watch or download videos, which are the biggest waste of bits, I mean wonderful demand generators for broadband capacity.  Certainly better than satellite (too much delay) or dial-up, but plain old DSL is still better.


UVerse is cable TV. It is not about Intenret access, but using the same wire to provide switched digital video.  So there has to be fiber (with all the channels) going to the VRAD, which can tolerate only up to around 4000 feet of wire, if the wire is in decent shape.  In rural areas that doesn't add up.  Satellite TV is still the most effective option for home entertainment.  Then terrestrial radio (why did that Marconi-era term "wireless" get revived?) makes the most sense for lower-bandwidth applications where it's too expensive to string fiber.  CAF may finally put an end to the wasteful "fiber to the ranch" for $20k+ that USF and RUS have been paying rate-of-return ILECs to build.

fgoldstein
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fgoldstein,
User Rank: Light Sabre
12/5/2012 | 5:18:51 PM
re: AT&T Eyes Expanding U-verse


Laytonville is part of a cluster of Verizon-California exchanges; AT&T is not the ILEC there.  So of course there's no UVerse.  To be sure, it's a very rural area and Verizon proably doesn't even have DSL there either.  They certanly don't in Covelo, the next CO over (though a long slog over the mountains).  HOWEVER, a CLEC that I work with has DSL in both COs, Laytonville and Covelo, as well as WISP coverage of much of the area.


THis is a tough area for WISPs, since it's mountainous; if you really want a hurtin' spot, try Dos Rios, a little valley spot wedged bewteen undulating mountain ranges.  And don't try to string fiber there either.  Covelo's CO has no fiber, becuase CEQA rules make it so hard to string anything along the roads.  Rural Broadband Now! has DSL there because it beams licensed microwave into Covelo from a snowy mountain about 30 miles away.  That relays back to Willits, on the ATT side of the divide.


So when ATT talks about expanding UVerse, this is not the part of the world that they're talking about.  Mendocino and Humbolt are really tough areas to serve, so it's best left to intrepid entrepreneurs who aren't wedded to one technology.

paolo.franzoi
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paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 5:18:49 PM
re: AT&T Eyes Expanding U-verse


rma,


Companies are in business to make money for their shareholders.  In fact, people are supposed to go to jail if they don't maximize their profits.  There is certainly debate around short term and long term profits, but I think you get the point.  The data caps have not lowered their wireless revenue so seem like a way to "monetize" their networks.


On the other side, Clearwire is definitely NOT available everywhere.  Why do you think this is?  Is it because Clearwire needs to up its profits being in markets where it believes it can make money?


seven


 

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